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October 2, 2007
Biz Startup Basics
About 7 percent of the U.S. population is in the process of starting a business at any given time, according to the National Federation of Independent Business. Here are some basic need-to-knows for starting your own.
Tired of working for The Man? There are plenty of advantages associated with starting your own business. Perhaps the biggest advantage is you become your own boss and take control of your own future rather than being at the mercy of upper management.
Of course, there is also plenty of hard work required in starting your own business. So where does one begin?
Foremost, upon coming up with an idea, product or service, put it down on paper. You’re more likely to succeed if you have a plan, charting your way to financial success.
A business plan precisely defines your business and identifies your goals. What price do you intend to sell your product or service for? How much will it cost you to produce? Estimate your profit roughly, remembering to factor in fixed costs such as rent, energy, etc. Include the basics — the name of the business and necessary resources, as well as short- and long-term business and financial goals.
The basic components include a current and pro forma balance sheet, an income statement and a cash flow analysis, according to the United States Small Business Administration:
It helps you allocate resources properly, handle unforeseen complications, and make good business decisions. As it provides specific and organized information about your company and how you will repay borrowed money, a good business plan is a crucial part of any loan application. Additionally, it informs sales personnel, suppliers and others about your operations and goals.
Simply put, a business plan is a selling document, serving as your firm’s resume.
Next up is research. Market research can prove invaluable in both determining your idea’s potential and improving on your competition’s offering. The aim here is basically two parts: to gain a general sense of the type of customer your product or service will serve; and to understand what your competition is doing so you can do it better.
You can gather information from industry associations, Web searches, periodicals, federal and state agencies, and so forth. A trip to the library or a few hours online can set you on your way to really understanding your market.
How much are other companies providing the same or similar products/services for? Can you add something to it to make yours different and hence a better price?
“Maybe their service is poor. Maybe their product has some flaws — something you’ll only know if you try it out yourself, notes Entrepreneur.com. “Or maybe you’ve figured out a way to do things better, smarter, more cost-effectively. Find your selling point. It’s going to be the core of your marketing program, if and when you’re ready for that step. It’s also going to be what sets you apart and lures customers your way.”
What makes you different from the competition? Put down your unique selling proposition (USP). Also, how are you going to market your product: via newspapers, a Web site, word of mouth, etc.? According to 1000Ventures, the USP requires three things:
• Each advertisement, or proposition, must say to the reader/potential customer, “Buy this product, and you will get this specific benefit”;
• The proposition must be one that the competition cannot, or does not, offer. It must be unique; and
• The proposition must be so strong that it can move the mass millions (i.e., to pull over new customers to your product).
Focus, keep it short and, above all, be different.
Another thing to consider is the best ownership structure for your small business: incorporation (Inc.), LLC, etc. This is important for tax purposes. For more on this, see
Think about how you’re going to finance your business initially: the bank, venture capitalists, angel investors, SBA government grants, your own savings — these are all options, so figure out which is best for your situation. About 53 percent of new small businesses begin in the home with less than $10,000, according to the National Federation of Independent Business. Many start with leased or used capital and equipment. About 3 percent are franchises. For tips and lots of other information related to this, check out the Startup Financing and Guides to Raising Money sections of Entrepreneur.com.
Finally (as far as starting goes), make your product or service available to customers, using your marketing strategy determined above. While specific marketing problems are unique to each business, common problems facing small businesses are typically a shortage of funds for adequate advertising and promotion, plus a lack of time for developing creative marketing strategies. Moreover, you simply cannot expect to compete as a small business today without choosing from a growing arsenal of online marketing tools, the least of which is creating a simple, effective Web site. Also, keep in mind that marketing for small businesses is not a one-time event, but an on-going process. For more on this, check out Microsoft’s Small Business Center.
Don’t worry if you lack business skills and experience in areas such as time management, personal-contact selling, negotiating, bookkeeping and the ability to create effective advertisements, says James Stephenson in his book 202 Services You Can Sell for Big Profits. “There is no question these are all important skills to have, but at the same time they're also skills that with practice can be learned and mastered.”
We’re sure we’ve barely scratched the surface here, as starting your own small business takes far more than the tips offered in this simple guide. Fortunately, there is a whole lot of help to be found online. Consider the following small-biz resources for all-round assistance in determining if and how to get started being your own boss.
National Federation of Independent Business
Entrepreneur.com: Starting a Business
Fortune Small Business (on CNN Money)
How-To | Starting a Business (Inc.com)
Fast Company Online Guides
Business Week
Score Counselors to America's Small Business
United States Dept. of Labor: Small Business
Small Business Resource Network
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2 CommentsGood day. I am 65 yrs. old and immigrated to New Zealand from South Africa 5 yrs ago. I find it very difficult to find a job. I am very fit and healthy. Altough I have not got the finance, I am going to open my own small business. I have God given talents and so I am to use this to my advantage.Thank you for Thomas, it is a great help and inspiration. I believe in you.
Regards
Ray
The one thing you forgot to mention was the Federal Grants, they increased this year, and have been since 1999, from about $300 billion available to $900 billion being available, you can verify that from one of their websites:
http://www.usaid.gov
I assist business, in getting investors to come aboard, and grants some want both, others just want one, so my business over the last two years has increased in adding multiple grants. Most people used to file one maybe three, now they are filing 8, and one corporation filed 11, 4 got refused, but the rest were approved, why not but they want a good selling point in your business, but that you know how you intend to invest portions of your funds, a projection, complete budget that balances to the amount of the Grant, so that your company can bring growth back to your company, not depending on just that one grant, and if you do that you can get automatic grants good for three to four years, then re-apply again when term is up.
You cannot apply to the same agency at the same time, on the same dates; it must be different, and there are limited amount of pages for each grant, different fonts, and formats, but just knowing this is why they buy our HandBooks. We have 45 of them, we write them for your business, as we process your account.
Each business is different. Getting Investors, Acquisitions, Finance Acquisition, Business Grants, Foreclosures, and different industry, Hand Books 1, 2, 3, 4, and now 5 are for different types of Industry; but 5 is more detailed again are written to support that industry as they apply not one standard, also how to get 6-30% ROR-rate of return so the Investor, is interested in your company, but your Grant, and their Investment being insured, unwritten, to the closing and registering stock, to Business Plan, and create PPM-Preferred Placement Memorandum what all investors require, and the details of each grant, their divisions requirement, when they are due to be filed, contact name, telephone numbers, and much more than you find at the local seminars in your areas on Grants, we walk you through it all the way.
Guarantee, you will receive a Grant, with in 6 months from the filing date, and Guarantee, we will find you Investors, to can personally talk to, help close them, learn how its done.
Its your Business, you want it to survive, then learn all the steps.
October 28, 2007 4:31 AM
